Exhibit 10.2


 


PIXELWORKS,
INC.


 


1997
STOCK INCENTIVE PLAN


As
Amended


 


1.                                       Purposes of the Plan.  The purposes of this Stock Incentive Plan are to attract and
retain the best available personnel for positions of substantial
responsibility, to provide addi-tional incentive to the Employees and
Consultants of the Company and to promote the success of the Company’s
business.


 


Options granted hereunder may be either
“incentive stock options,” as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, or “nonqualified stock options,” at the
discretion of the Board and as reflected in the terms of the written option
agreement.  In addition, shares of the
Company’s Common Stock may be Sold hereunder independent of any Option grant.


 


2.                                       Definitions.  As used herein, the following definitions shall apply:


 


(a)                                  “Administrator” shall
mean the Board or any of its Committees as shall be administering the Plan, in
accordance with Section 4.(a) of the Plan.


 


(b)                                 “Board” shall mean the
Board of Directors of the Company.


 


(c)                                  “Code” shall mean the
Internal Revenue Code of 1986, as amended.


 


(d)                                 “Committee” shall mean a
committee appointed by the Board in accordance with Section 4.(a) of the
Plan.


 


(e)                                  “Common Stock” shall mean
the Common Stock of the Company.


 


(f)                                    “Company” shall mean
Pixelworks, Inc. an Oregon corporation.


 


(g)                                 “Consultant” shall mean
any person who is engaged by the Company or any Parent or Subsidiary to render
consulting services and is compensated for such consulting services and any
Director of the Company whether compensated for such services or not.


 


(h)                                 “Continuous Status as an
Employee or Consultant” shall mean the absence of any interruption or
termination of service as an Employee or Consultant.  Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) any sick leave, military leave, or
any other leave of absence approved by the Company ; provided, however, that
for purposes of Incentive Stock Options, any such leave is for a period of not more
than ninety days or reemployment upon the expiration of such leave is
guaranteed by contract or statute, provided, further, that on the ninety-first
day of such leave (where re-employment is not guaranteed by contract or
statute) the Optionee’s Incentive Stock Option shall automatically


 

















 


convert to a Nonqualified Stock Option; or
(ii) transfers between locations of the Company or between the Company, its
Parent, its Subsidiaries or its successor.


 


(i)                                     “Director” shall mean a
member of the Board.


 


(j)                                     “Disability” shall mean
total and permanent disability as defined in Section 22(e)(3) of the Code.


 


(k)                                  “Employee” shall mean any
person, including Officers and Directors, employed by the Company or any Parent
or Subsidiary.  Neither the payment of a
director’s fee by the Company nor service as a Director shall be sufficient to
constitute “employment” by the Company.


 


(l)                                     “Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended.


 


(m)                               “Incentive Stock Option”
shall mean an Option intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code.


 


(n)                                 “Nonqualified Stock Option”
shall mean an Option not intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code.


 


(o)                                 “Notice of Grant” shall
mean a written notice evidencing certain terms and conditions of an individual
Option grant.  The Notice of Grant is
part of the Option Agreement.


 


(p)                                 “Officer” shall mean a
person who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder.


 


(q)                                 “Option” shall mean a
stock option granted pursuant to the Plan.


 


(r)                                    “Option Agreement” shall
mean a written agreement between the Company and an Optionee evidencing the terms
and conditions of an individual Option grant. 
The Option Agreement is subject to the terms and conditions of the Plan.


 


(s)                                  “Optioned Stock” shall
mean the Common Stock subject to an Option.


 


(t)                                    “Optionee” shall mean an
Employee or Consultant who receives an Option.


 


(u)                                 “Parent” shall mean a
“parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.


 


(v)                                 “Plan” shall mean this
1997 Stock Incentive Plan.


 

















 


(w)                               “Rule 16b-3”  shall mean Rule 16b-3 of the Exchange Act or
any successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.


 


(x)                                   “Sale” or “Sold”
shall include, with respect to the sale of Shares under the Plan, the sale of
Shares for consideration in the form of cash or notes, as well as a grant of
Shares for consideration in the form of past or future services.


 


(y)                                 “Share” shall mean a
share of the Common Stock, as adjusted in accordance with Section 11 of
the Plan.


 


(z)                                   “Subsidiary” shall mean a
“subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.


 


3.                                       Stock Subject to the Plan.  Subject to the provisions of Section 11 of the Plan, the
maximum aggregate number of Shares which may be optioned and/or Sold under the
Plan is 18,340,116 shares
of Common Stock.  The Shares may be
authorized, but unissued, or reacquired Common Stock.


 


If an Option should expire or become
unexercisable for any reason without having been exercised in full, the
unpur-chased Shares which were subject thereto shall, unless the Plan shall
have been terminated, become available for future Option grants and/or Sales
under the Plan; provided, however, that Shares that have actually been issued
under the Plan shall not be returned to the Plan and shall not become available
for future distribution under the Plan.


 


4.                                       Administration of the Plan.


 


(a)                                  Procedure.


 


(i)  Multiple
Administrative Bodies.  If permitted
by Rule 16b-3, the Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are neither
Directors nor Officers.


 


(ii)  Administration
With Respect to Directors and Officers Subject to Section 16(b).  With respect to Option grants made to
Employees who are also Officers or Directors subject to Section 16(b) of
the Exchange Act, the Plan shall be administered by (A) the Board, if the Board
may administer the Plan in compliance with the rules governing a plan intended
to qualify as a discretionary plan under Rule 16b-3, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted to comply with the rules, if any, governing a plan intended to
qualify as a discretionary plan under Rule 16b-3.  Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.  From time to time the Board may increase the
size of the Committee and appoint additional members, remove members (with or
without cause) and substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the rules, if any, governing a plan
intended to qualify as a discretionary plan under Rule 16b-3.  With respect to persons subject to
Section 16 of the Exchange Act, transactions under the Plan are intended
to comply


 

















 


with all applicable conditions of Rule
16b-3.  To the extent any provision of
the Plan or action by the Administrator fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Administrator.


 


(iii) 
Administration With Respect to Other Persons.  With respect to Option grants made to
Employees or Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by (A) the Board or (B) a Committee designated
by the Board, which Committee shall be constituted to satisfy the legal
requirements relating to the administration of stock option plans under
applicable corporate and securities laws and the Code.  Once appointed, such Committee shall serve
in its designated capacity until otherwise directed by the Board.  The Board may increase the size of the
Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and remove
all members of the Committee and thereafter directly administer the Plan, all
to the extent permitted by the legal requirements relating to the
administration of stock option plans under state corporate and securities laws
and the Code.


 


(b)                                 Powers of the Administrator.  Subject to the provisions of the Plan, and in the case of a
Committee, subject to the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:


 


(i)                                     to grant Incentive Stock Options
in accordance with Section 422 of the Code, or Nonqualified Stock Options;


 


(ii)                                  to authorize Sales of Shares of
Common Stock hereunder;


 


(iii)                               to determine, upon review of
relevant information and in accordance with Sec-tion 8.(b) of the Plan,
the fair market value of the Common Stock;


 


(iv)                              to determine the
exercise/purchase price per Share of Options to be granted or Shares to be
Sold, which exercise/purchase price shall be determined in accordance with
Section 8.(a) of the Plan;


 


(v)                                 to determine the Employees or
Consul-tants to whom, and the time or times at which, Options shall be granted
and the number of Shares to be represented by each Option;


 


(vi)                              to determine the Employees or
Consultants to whom, and the time or times at which, Shares shall be Sold and
the number of Shares to be Sold;


 


(vii)                           to interpret the Plan;


 


(viii)                        to prescribe, amend and rescind
rules and regulations relating to the Plan;


 

















 


(ix)                                to determine the terms and
provisions of each Option granted (which need not be identical) and, with the
con-sent of the holder thereof, modify or amend each Option;


 


(x)                                   to determine the terms and
provisions of each Sale of Shares (which need not be identical) and, with the consent
of the purchaser thereof, modify or amend each Sale;


 


(xi)                                to accel-erate or defer (with
the consent of the Optionee) the exercise date of any Option;


 


(xii)                             to accelerate or defer (with the
consent of the Optionee or purchaser of Shares) the vesting restrictions
applicable to Shares Sold under the Plan or pursuant to Options granted under
the Plan;


 


(xiii)                          to authorize any person to
execute on behalf of the Company any instrument required to effectuate the
grant of an Option or Sale of Shares previously granted or authorized by the
Board;


 


(xiv)                         to determine the restrictions on
transfer, vesting restric-tions, repurchase rights, or other restrictions
applicable to Shares issued under the Plan;


 


(xv)                            to effect, at any time and from
time to time, with the consent of the affected Optionees, the cancellation of
any or all outstanding Options under the Plan and to grant in substitution
therefor new Options under the Plan covering the same or different numbers of
Shares, but having an Option price per Share con-sistent with the provisions of
Section 8 of this Plan as of the date of the new Option grant;


 


(xvi)                         to establish, on a case-by-case
basis, different terms and conditions pertaining to exercise or vesting rights
upon termination of employment, whether at the time of an Option grant or Sale
of Shares, or thereafter;


 


(xvii)                      to approve forms of agreement
for use under the Plan;


 


(xviii)      to
reduce the exercise price of any Option to the then current fair market value
if the fair market value of the Common Stock covered by such Option shall have
declined since the date the Option was granted;


 


(xix)                           to determine whether and under
what circumstances an Option may be settled in cash under subsection 9(f)
instead of Common Stock; and


 


(xx)                              to make all other deter-minations
deemed necessary or advisable for the administration of- the Plan.


 

















 


(c)                                  Effect of Administrator’s
Decision.  All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options granted under the Plan or Shares
Sold under the Plan.


 


5.                                       Eligibility.


 


(a)                                  Persons Eligible.  Options may be granted and/or Shares Sold only to Employees and
Consultants.  Incentive Stock Options
may be granted only to Employees.  An
Employee or Consultant who has been granted an Option or Sold Shares may, if he
or she is otherwise eligible, be granted an additional Option or Options or
Sold additional Shares.


 


(b)                                 ISO Limitation.  To the extent that the aggregate fair market value: (i) of Shares
subject to an Optionee’s Incentive Stock Options granted by the Company, any
Parent or Subsidiary, which (ii) become exercisable for the first time during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonqualified Stock
Options.  For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the
order in which they were granted, and the fair market value of the Shares shall
be determined as of the time of grant.


 


(c)                                  Section 5.(b) Limitations.  Section 5.(b) of the Plan shall apply only to an Incentive
Stock Option evidenced by an Option Agreement which sets forth the intention of
the Company and the Optionee that such Option shall qual-ify as an Incentive
Stock Option.  Section 5.(b) of the
Plan shall not apply to any Option evidenced by a Option Agreement which sets
forth the intention of the Company and the Optionee that such Option shall be a
Nonqualified Stock Option.


 


(d)                                 No Right to Continued Employment.  The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the Company’s
right to terminate his employment or consulting relationship at any time, with
or without cause.


 


(e)                                  Other Limitations.  The following limitations shall apply to grants of Options to
Employees:


 


(i)                                     No Employee shall be granted, in
any fiscal year of the Company, Options to purchase more than 300,000 Shares.


 


(ii)                                  In connection with his or her
initial employment, an Employee may be granted Options to purchase up to an
additional 300,000 Shares which shall not count against the limit set forth in
subsection (i) above.


 


(iii)                               The foregoing limitations shall
be adjusted proportionately in connection with any change in the Company’s
capitalization as described in Section 11.


 


(iv)                              If an Option is canceled in the
same fiscal year of the Company in which it was granted (other than in
connection with a transaction described in Section 11), the


 

















 


canceled Option shall be counted against the
limits set forth in subsections (i) and (ii) above.  For this purpose, if the exercise price of an Option is reduced,
the transaction will be treated as a cancellation of the Option and the grant
of a new Option.


 


6.                                       Term of Plan.  The Plan shall become effective upon the earlier to occur of its
adoption by the Board or its approval by the shareholders of the Company as
described in Section 17 of the Plan. 
It shall continue in effect for a term of ten (10) years, unless sooner
terminated under Section 13 of the Plan.


 


7.                                       Term of Option.  The term of each Option shall be stated in the Notice of Grant;
provided, however, that in the case of an Incentive Stock Option, the term
shall be ten (10) years from the date of grant or such shorter term as may be
provided in the Notice of Grant. 
However, in the case of an Incentive Stock Option granted to an Optionee
who, at the time the Incentive Stock Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Incentive Stock Option
shall be five (5) years from the date of grant thereof or such shorter term as
may be provided in the Notice of Grant.


 


8.                                       Exercise/Purchase Price and
Consideration.


 


(a)                                  Exercise/Purchase Price.  The per-Share exercise/purchase price for the Shares to be issued
pursuant to exer-cise of an Option or a Sale shall be such price as is
determined by the Administrator, but shall be subject to the following:


 


(i)                                     In the case of an Incentive
Stock Option


 


(A)                              granted to an Employee who, at
the time of the grant of such Incentive Stock Option, owns stock represent-ing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than one hundred ten percent (110%) of the fair market value per Share on
the date of the grant.


 


(B)                                granted to any other Employee,
the per Share exercise price shall be no less than one hundred percent (100%)
of the fair mar-ket value per Share on the date of grant.


 


(ii)           In
the case of a Nonqualified Stock Option or Sale, the per Share exercise/purchase
price shall no less than one hundred percent (100%) of the fair market value
per Share on the date of grant..


 


(b)                                 Fair Market Value .  The fair market value per Share shall be determined by the
Administrator in its discretion; provided, however, that where there is a
public market for the Common Stock, the fair market value per Share shall be
the closing price of the Common Stock (or the closing bid if no sales were
reported) for the last market trading day prior to the date of grant of the Option
or authorization of Sale or other determination, as reported in The Wall
Street Journal (or, if not so reported, as otherwise reported by the
National Association of


 

















 


Securities Dealers Automated Quotation
(NASDAQ) System) or, in the event the Common Stock is listed on a stock
exchange, the fair market value per Share shall be the closing price on such
exchange for the last market trading day prior to the date of grant of the
Option or authorization of Sale or other determination, as reported in The
Wall Street Journal.


 


(c)                                  Consideration.  The consideration to be paid for the Shares to be issued upon
exercise of an Option or pursuant to a Sale, including the method of payment,
shall be determined by the Administrator. 
In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant.  Such consideration may consist of:


 


(i)                                     cash;


 


(ii)                                  check;


 


(iii)                               promissory note;


 


(iv)                              transfer to the Company of
Shares which


 


(A) 
in the case of Shares acquired upon exercise of an Option, have been
owned by the Optionee for more than six months on the date of surrender, and


 


(B) 
have a fair market value on the date of surrender equal to the aggregate
exercise price of the Shares to be acquired;


 


(v)                                 delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds required to pay the
exercise price;


 


(vi)                              such other consideration and
method of payment for the issuance of Shares to the extent permitted by legal
requirements relating to the administration of stock option plans and issuances
of capital stock under applicable corporate and securities laws and the Code;
or


 


(vii)                           any combination of the foregoing
methods of payment.


 


If the fair market value of the number of
whole Shares transferred or the number of whole Shares surrendered is less than
the total exercise price of the Option, the shortfall must be made up in cash
or by check.  Notwithstanding the
foregoing provisions of this Section 8.(c), the consideration for Shares
to be issued pursuant to a Sale may not include, in whole or in part, the
consideration set forth in subsections (iv) and (v) above.


 


9.                                       Exercise of Option.


 


(a)                                  Procedure for Exercise; Rights
as a Shareholder.  Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the


 

















 


Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan.


 


An Option may not be exercised for a fraction
of a Share.


 


An Option shall be deemed to be exercised
when written notice of such exercise has been given to the Company in
accordance with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the Option is
exercised has been received by the Company. 
Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under the Option Agreement and
Section 8.(c) of the Plan.  Each
Optionee who exercises an Option shall, upon notification of the amount due (if
any) and prior to or concurrent with delivery of the certificate representing
the Shares, pay to the Company amounts necessary to satisfy applicable federal,
state and local tax withholding requirements. 
An Optionee must also provide a duly executed copy of any stock transfer
agreement then in effect and determined to be applicable by the
Administrator.  Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidenc-ing
such Shares, no right to vote or receive divi-dends or any other rights as a
shareholder shall exist with respect to the Optioned Stock represented by such
stock certificate, notwithstanding the exercise of the Option.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.


 


Exercise of an Option in any manner shall
result in a decrease in the number of Shares which thereafter may be available,
both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.


 


(b)                                 Termination of Employment or
Consulting Relationship.  In the event that an Optionee’s Continuous
Status as an Employee or Consultant terminates (other than upon the Optionee’s
death or Disability), the Optionee may exercise his or her Option, but only
within such period of time as is determined by the Administrator, and only to
the extent that the Optionee was entitled to exercise it at the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). 
In the case of an Incentive Stock Option, the Administrator shall
determine such period of time (in no event to exceed three (3) months from the
date of termination) when the Option is granted.  If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not exercise his or her
Option with the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.


 


(c)                                  Disability of Optionee.  In the event that an Optionee’s Continuous Status as an Employee
or Consultant terminates as a result of the Optionee’s Disability, the Optionee
may exercise his or her Option at any time within twelve (12) months from the
date of such termination, but only to the extent that the Optionee was entitled
to exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of
Grant).  If, at the date of termination,
the Optionee is not entitled to exercise his or her


 

















 


entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.


 


(d)                                 Death of Optionee.  In the event of the death of an Optionee, the Option may be
exercised at any time within twelve (12) months following the date of death
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant), by the Optionee’s estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent that the Optionee was entitled to exercise the Option at the date
of death.  If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the
Plan.  If, after death, the Optionee’s estate
or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.


 


(e)                                  Rule 16b-3.  Options granted to persons subject to Section 16(b) of the
Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.


 


(f)                                    Buyout Provisions.  The Administrator may at any time offer to buy out for a payment
in cash or Shares, an Option previously granted, based on such terms and
conditions as the Administrator shall establish and communicate to the Optionee
at the time that such offer is made.


 


10.                                 Nontransferability of Options.  Except as otherwise specifically provided in the Option
Agreement, an Option may not be sold, pledged, assigned, hypothecated,
transferred or dis-posed of in any manner other than by will, or by the laws of
descent and distribution, and may be exercised during the lifetime of the
Optionee only by the Optionee or, if incapacitated, by his or her legal
guardian or legal representative.


 


11.                                 Adjustments Upon Changes in
Capitalization or Merger.


 


(a)  Changes
in Capitalization: Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each outstanding
Option and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
Sales made or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
con-sideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been
“effected without receipt of consideration.” 
Such adjustment shall be made by the Administrator, whose determination
in


 

















 


that respect shall be final, binding and
conclusive.  Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.


 


(b)  Dissolution
or Liquidation.  In the event of the
proposed dissolution or liqui-dation of the Company, each outstanding Option
will terminate immediately prior to the consummation of such proposed action,
unless other-wise pro-vided by the Administrator.  The Administrator may, in the exercise of its sole discretion in
such instances, declare that any Option shall terminate as of a date fixed by
the Board and give each Optionee the right to exercise his or her Option as to
all or any part of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable.


 


(c)  Merger
or Asset Sale.  In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each outstanding Option
shall be assumed or an equivalent option shall be substi-tuted by such
successor corporation or a Parent or Subsidiary of such successor corporation,
unless the Administrator determines, in the exercise of its sole discretion and
in lieu of such assumption or substitution, that the Optionee shall have the
right to exercise the Option as to all of the Optioned Stock, including Shares
as to which the Option would not otherwise be exercisable.  If the Administrator makes an Option fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice or such shorter period as the Administrator may specify in the
notice, and the Option will terminate upon the expiration of such period.  For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale of assets,
the Option confers the right to purchase, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation and the Optionee, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the merger or sale of assets.


 


12.                                 Time of Granting Options.  The date of grant of an Option shall, for all purposes, be the
date on which the Administrator makes the determination granting such
Option.  Notice of the determination shall
be given to each Optionee within a reasonable time after the date of such
grant.


 

















 


13.                                 Amendment and Termination of the
Plan.


 


(a)  Amendment
and Termination.  The Board may
amend or terminate the Plan from time to time in such respects as the Board may
deem advisable.


 


(b)  Shareholder
Approval.  The Company shall obtain
shareholder approval of any Plan amendment to the extent necessary and
desirable to comply with Rule 16b-3 or with Section 422 of the Code (or
any successor rule or statute or other applicable law, rule or regulation,
including the requirements of any exchange or quotation system on which the
Common Stock is listed or quoted).  Such
shareholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.


 


(c)  Effect
of Amendment or Termination.  Any
such amendment or termination of the Plan shall not affect Options already
granted, and such Options shall remain in full force and effect as if this Plan
had not been amended or terminated, unless mutually agreed otherwise between
the Optionee and the Administrator, which agreement must be in writing and
signed by the Optionee and the Company.


 


14.                                 Conditions Upon Issuance of
Shares.  Shares shall not be issued pursuant to the
exercise of an Option or a Sale unless the exercise of such Option or
consummation of the Sale and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, applicable state securities
laws, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange (including NASDAQ) upon which the Shares
may then be listed, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.


 


15.                                 Reservation of Shares.  The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.


 


16.                                 Liability of Company.


 


(a)  Inability
to Obtain Authority.  Inability of
the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.


 


As a condition to the exercise of an Option
or a Sale, the Company may require the person exercising such Option or to whom
Shares are being Sold to repre-sent and warrant at the time of any such
exercise or Sale that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.


 


(b)  Grants
Exceeding Allotted Shares.  If the
Optioned Stock covered by an Option exceeds, as of the date of grant, the number
of Shares which may be issued under the


 

















 


Plan without additional shareholder approval,
such Option shall be void with respect to such excess Optioned Stock, unless
shareholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with
Section 13 of the Plan.


 


17.                                 Shareholder
Approval.  Continuance of the Plan
shall be subject to approval by the shareholders of the Company within twelve
(12) months before or after the date the Plan is adopted.  Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state
law.